Contract is an agreement enforceable by law made between two
or more persons by which rights are acquired by one or more to act for bearness
on the part of the others (Indian Contract Act 1872)
Essential
elements of contract:
1.
Offer and acceptance
2.
Legal relation
3.
Legality of object
4.
Capability
5.
Free consent
6.
Certainty
7.
Promise of performance
8.
Writing and registration
Services
usually given on contract:
ü Cleaning: This can be on consultancy basis or
specialist work (e.g. deep cleaning). Contract cleaners provide both general
and specialized services which can include general cleaning of public rooms,
toilets, kitchens, provision of bedroom cleaning services, periodic cleaning of
walls, ceiling, carpets, upholstery, windows, and different surfaces.
ü Linen hire: full linen hires
service or specialized items e.g. uniforms, towels, banqueting items, etc.
ü Laundry and flower arrangement: completely
or partly.
ü Personal services/products: shoe
cleaning machine, dispensers for towels, soap, dust control, pest control,
refuse collection, horticulture and landscaping.
Method
of costing: The methods used to access the cost of the contract
depends on its
ü Type
ü Size
of the job being carried out
ü Skills
required
ü Policy
of company
ü Budget
- Management fee, consultancy basis: The customer provides his own labour, equipments, materials etc. and the contractor provides the management with the expertise and possible supervisory staff.
- Fixed periodic cost: may be made either as a total cost or cost per unit of work. This is a very commonly used method and is available in two forms.
ü Uncontrolled input: The
contractor agrees to provide a service of a given nature for a specific cost.
There is no indication of the number of workers, hours worked or the type of
equipment and materials used. Therefore it is essential that the specification
is detailed indeed.
ü Controlled input: This type of
contract also specifies the minimum number of workers, hours worked and other
equipments.
- Cost plus profit % basis: This has an advantage of providing a perfectly viable, flexible programme, as the customer is free to determine his own needs as things change (e.g. low occupancy due to weather conditions). This also provides incentives for the contractor to increase his basic cost in order to earn more profits.
- Cost plus fixed fee basis: The contractor is reimbursed for all costs like that of equipment, material, labour etc. and is paid a fixed fee for the management of the programme. This provides a flexible programme along with elimination of any incentive to spend more money.
Guidelines for hiring contract
services
ü Prepare
a detailed specification indicating exact number of working hours, areas,
process, frequency, time factor etc.
ü Put
out tenders to at least three contractors and compare their rates, not
necessarily choose the cheapest one because the work standard may be poor.
Strike out a balance.
ü Consider
the length of contract. It should not be more than two years. Also, the
condition of termination should be penned down clearly.
ü Careful
study should be made regarding payment methods.
ü Try
to select a local contractor.
ü Check
the type and amount of supervision.
ü Check
on all other arrangement after the contract is awarded like that of security
passes, meal coupons, locker facility etc.
ü Spot
checking the work after the contract has been awarded.
Advantages of contract services
ü A
budget can be worked out accurately because the price is known for a given
period and may be economical than direct labour and services.
ü The
contractor is responsible for recruiting, training, paying and dismissing.
ü Contract
services eliminate many of the problems between management and unions.
ü The
contract company may offer bigger pay than the direct labour and therefore
attract more qualified and competent staff.
ü Eliminates
the need to buy specialized equipments and permit extra work without the need
of increasing the staff.
ü Specialized
contractors may be able to cope more easily in case of an emergency.
Disadvantages of contract services
ü Cost
may be too high for the acceptor.
ü Weakens
management authority over the quality and loyalty of staff working in the
premises.
ü Control
is loosened over operations.
ü Poor
supervision.
ü There
is a natural tendency of the contractor to use poor quality product which can
cause damage to the building, furniture, etc.
ü Security
may be weakened because of labour turnover.
ü There
is often no solution if a contractor does not carry out his work properly
except to terminate the contract.
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